No Work but You Can Stay

A unanimous decision of the High Court in Construction Forestry Mining and Energy Union (CFMEU) v Mammoet Australia Pty Ltd [2013] HCA 36 has shed light on the interpretation of "payment to an employee" in the context of protected industrial action.

Overturning findings of the lower courts, the High Court has confirmed that the provision of accommodation is not a "payment", and denial of accommodation would be an alteration of the position of the employees to their prejudice so as to constitute adverse action.

Background

The CFMEU represented a number of Mammoet's employees who worked at Woodside's Pluto natural gas project on a fly in/fly out basis. Their employment was governed by a greenfields agreement, under which Mammoet provided their accommodation while on location.

In April 2010, the employees embarked on a 28-day strike. In response to this protected industrial action, Mammoet ceased providing accommodation to the employees, relying on section 470(1) of the Fair Work Act 2009 (Cth) which prohibits an employer from making a payment to an employee taking protected industrial action in relation to the total duration of the action on that day.

In the Federal Magistrates Court, Lucev FM held that the provision of accommodation was the making of a payment prohibited by section 470(1). On appeal to the Federal Court of Australia, Gilmour J upheld this finding stating that "payment" in section 470(1) extends to payments in kind and includes the benefit of accommodation.

Issues on Appeal

Two critical issues arose on appeal.

Was the provision of accommodation by Mammoet a "payment to an employee in relation to the total duration of the industrial action" prohibited under section 470(1)?

Were the employees entitled to accommodation under the agreement when they were not ready, willing and available to work?

Payment to an Employee in Relation to the Total Duration of the Industrial Action

The High Court relied on other provisions of the Act referring to "payment" and "pay" to support a finding that when the Act speaks of payment it is speaking of payment in money.

The High Court also construed "payment" in light of section 470(1) as a civil remedy provision to support an interpretation that it only applied to payments of money. It stated that "the imposition of a civil penalty should be certain and its reach ascertainable" and the penalty is "not attracted by the transfer of just any economic benefit".
It was ultimately found that the purpose of section 470(1) is to prohibit "strike pay" ie payments to make up wages not earned by an employee during the period of industrial action.

As such, the High Court rejected Mammoet's argument and held that the provision of accommodation was not a "payment to an employee in relation to the total duration of the industrial action" prohibited by section 470(1).

Adverse Action

The High Court also rejected Mammoet's alternative argument that the employees were not entitled to accommodation under the agreement when they were not ready, willing and available to work. This argument was not addressed by the lower courts.

The High Court found that while the employment relationship existed, the employees' entitlement to accommodation arose from them acting on Mammoet's instruction to travel to the location of the project.

It was held that even if the employees ceased to be entitled to accommodation because they were not ready, willing and available to work, Mammoet's denial of accommodation would be an alteration of the position of the employees to their prejudice so as to constitute adverse action.

Significance for Employers

Whilst allowing the appeal from the CFMEU, the High Court has sent the case back to the Federal Circuit Court to be heard and determined according to the principles it has set down.

Despite no final ruling, this decision confirms that "payment" in the context of protected industrial action means a payment of money and does not include the provision of accommodation or just any economic benefit. Significantly, this means that employers will be required to continue providing accommodation to employees during a strike or other protected industrial action.

The High Court has indicated that whether the prohibition under section 470(1) captures a payment will depend on the circumstances of the case and it is not "necessary or desirable" to provide an exhaustive list of those circumstances. It provided the example of payment by way of a gift and said this might be captured if the circumstances established that the gift was to compensate for wages not earned.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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